Reluctant council increases building fees

By RICHARD HANNERS / Whitefish Pilot

The idea of raising building permit and planning review fees when construction has slowed down had some city councilors scratching their heads during their June 16 meeting, but city manager Gary Marks defended his plan to balance the budget.

The amount of work in the planning office was down, he noted, but the amount of overhead was still the same. And the city didn't want to lay off any of their inspectors because hiring good inspectors is difficult, he said.

"We need to weather through this," Marks said. "If you have a better way to do this, let me know."

Revenue from building permit and planning review fees has declined by $439,386 over the past two fiscal years, Marks said. Most of that decline occurred over the past 11 months, and projections show a $357,849 deficit for the coming fiscal year.

Marks' budget-balancing plan starts by shifting $92,206 from the building fund to the general fund and then having the general fund "loan" the building fund $78,731. That way, the money can be repaid when the current building slow-down ends.

Those two steps leaves a $185,912 deficit which could be addressed by raising building permit and planning review fees, he said.

"It should be noted that Montana law has strict requirements to prevent cities from collecting too much construction-related fee revenues to support their building code funds," Marks said. "If construction activity were to increase in the future, the proposed higher rates might create a situation where the city would be required to cut rates to remain within legal limitations for revenue collections."

Building permit and planning review fees are typically based on a percentage of a building permit's value. Marks called for increasing the percentage for building permits from 41 percent to 60 and for planning review from 35 percent to 65.

The total effect would be an increase from 76 percent to 125. That's still well below Billings and Bozeman, which charge 165 percent for the combined fees, but above Missoula at 120 percent. Kalispell was at the bottom of the charts at 33 percent.

"It is important to understand that the proposed increase in the plan review fee would apply only to multi-family, commercial and industrial projects," Marks said. "The increase in the plan review fee would not be applicable to single-family structures. The only increase for single-family structures would be in the building permit fees."

Larry Campbell, a building contractor and outspoken "doughnut" resident, said he opposed raising fees because the higher cost of materials was already driving up fees, compounding the cost of building. He said he spent $500 on fees for a deck that required three 10-minute inspections.

The councilors were reluctant to make a motion of approval for Marks' plan, but it passed 4-1 with councilor Turner Askew in opposition.